SGD/AUD Outlook:
Bearish, as the rate is below its recent average and near recent lows due to clear economic pressures.
Key drivers:
• Rate gap: The Reserve Bank of Australia has recently raised interest rates, while the Monetary Authority of Singapore has taken a more accommodative stance, widening the interest rate differential.
• Risk/commodities: Oil prices remain volatile, affecting commodity currencies like the AUD, but adding pressure on the SGD due to Singapore's export dependency.
• One macro factor: Ongoing US tariffs on Singapore goods are straining the country’s export-driven economy, impacting the SGD negatively.
Range:
The SGD/AUD is likely to test recent lows, maintaining its position in a relatively stable range while pressures persist.
What could change it:
• Upside risk: A faster-than-expected recovery in Singapore's export market could strengthen the SGD.
• Downside risk: Further tightening by the RBA or a significant drop in commodity prices could pressure the AUD, affecting the pair.
